05/22 2011

CEO Decision-Making: Use Data or Your Gut Instinct?

Should CEO’s use facts and data — or their gut instincts — when making key decisions?   The answer is both, according to recent research conducted by Modesto Maidique of Florida International University’s Center for Leadership.

In a series of interviews conducted with top CEO’s, Maidique found that “following my gut instinct”  frequently played a major role  in CEO decision-making.  Not surprisingly, decisions made from the gut were found to be much more successful when the CEO had great experience, knowledge, or insight in the industry or area where the decision was being made.   For example, a CEO in the cruise line industry used his decades of experience before using his “gut” to make a final decision on a $4.5 billion acquisition of another cruise line.   The decision has been deemed a major success.

However, upon further analysis, it appears that successful decisions based on gut instinct require more than just in-depth subject matter knowledge.  Instead, as Maidique points-out, such in-depth knowledge must also be combined with a sense of “deep introspection” — in sum, a CEO needs to take time and reflect on their own biases, emotions, and other factors that can impact their decision-making, and must take steps to ensure that these factors are considered before making a decision based on intuition or judgment.

Maidique summarizes his findings by saying that great leaders need to “know their business”, but also need to “know themselves”.   It is common for leaders at all levels to have blind spots in terms of how they analyze information, make key judgments, and eventually make a decision.  Knowing such biases or blind spots may help ensure that an executive reconsiders key information — or seeks out additional input from others — that they might naturally be inclined to gloss-over or ignore completely.    Incorporating this type of information can, of course, help a leader make a more effective decision.

 Self-awareness exercises (such as assessment tests) can be used to highlight the biases that each leader brings to the decision-making process.   Understanding such biases will allow a leader to become a much more well-informed — and therefore a much more effective — overall decision-maker.

05/15 2011

Executive Assessments Are Booming Again

The executive assessment business — whereby companies seeking to hire leaders place job candidates through a series of assessment tests and structured simulations — is booming again, according to a May 12 article in the Wall Street Journal.

As businesses scramble to fill leadership positions amidst a general hiring rebound, assessment firms are reporting that their business has increased by one third from the previous year.  In addition,  a recent survey of 516 employers found that 72% of the companies surveyed used assessments when filling executive positions — nearly twice the proportion reported in a 2010 survey…

Typically, the assessment process involves the candidate completing a variety of cognitive, personality, and motivational tests, with the testing process usually being conducted over the Internet.   Frequently, an interview with an external psychologist is  also included — with the resulting interview being “much more extensive” than a traditional job interview…

Managerial Simulation Exercises are sometimes also included in the evalaution process — for example, the job candidate may be placed in roleplay situations requiring the development of a strategic marketing plan, or they may have to mediate a sitution between two feuding peers, or handle a disgrunted customer.

The executive assessment process can cost upwards of $30k per candidate (if conducted by one of the larger  consulting firms) and can span several days.    And — in perhaps the most realistic simulation of any executive’s day — participants are frequently given a 30 minute lunch break during the simulation, but are then interrupted by a crisis that needs to be dealt with over their lunch period.   Such is life in the C-Suite…

05/8 2011

US Manufacturing Hiring — The Numbers Are Up!

While manufacturing lay-offs have captured media attention as of late, US firms are now actively searching for skilled workers in high schools, in community colleges, and in the ranks of the military.

As reported in a recent Wall Street Journal article, some manufacturers are stealing employees from other industries, are retraining displaced white collar workers, and in some cases are even hiring former prisoners who learned machinist skills while behind bars.

US manufacturers added 25,000 workers to their payrolls in April, the seventh straight quarer of modest employment gains in the manufacturing industry.

While the increase in the number of manufacturing jobs has plants scrambling to find employees, other factors are also making hiring more difficult.  For example, the first wave of baby boomer retirements is making it harder for plants to find experienced workers.  In addition, the US educational system does not actively promote industrial trades as a course of study for high school students.

As these manufacturers hire new workers, it will be important to identify job seekers who will work safely, who will be dependable, and who will exhibit a strong work ethic.   Job candidates are best evaluated via a structured selection process, which includes a systematic review of prior experienced, a structured interview, and the administration of assessment instruments designed to measure safety orientation, dependability, and work ethic.

05/4 2011

Should You Ban the Word “Talented” From Your Vocabulary?

Should leaders stop referring to key employees as being “talented”, “special”, or as having “high potential”?   The answer is yes, according to author Tony Schwartz.

According to Schwartz, such designations frequently result in said individuals receiving credit for things that they did not do, and also serves to imply that other employees do not have similar potential.

Schwartz, author of “The Way We’re Working Isn’t Working:  The Four Forgotten Needs That Energize Great Performance” also offers the following tips to inspire and nurture excellence in those that they lead:

  1. Regularly, genuinely, and specifically acknowledge & appreciate other’s successes:  There may be nothing more motivating to those you lead than to notice what they are doing well, and to express your appreciation with detail and specificity.   Adding a handwritten note is also a nice touch!
  2. Provide constant feedback:  Many people do not improve their skills because they do not receive feedback regularly enough.   Be sure not to just focus on deficiencies — instead, focus on where you can help them improve…
  3. Create and protect periods of uninterrupted focus:  Don’t demand instant responses from your people all day, as you can greatly interrupt their work flow and focus.  Resist evaluating people by the number of hours they work, and focus instead on evaluating others based on the value they produce.
  4. Focus on renewal throughout the day:  Many great performers can work intensely for 90 minute periods, then need time to recover and refuel.  Consider creating a “renewal room” or area — complete with comfortable furniture and quiet surroundings — to facilitate this process.
  5. Tie the pursuit of excellence to a larger mission:  Start by defining what you truly stand for, share with others what motivates you to get up in the morning, and encourage others to go through the same exercise themselves…

For more information, visit  .

05/3 2011

Should Companies Use Experimentation — Instead of Analysis — To Solve Problems?

Recent research has shown that companies with the strongest growth tend to prefer experimentation over other methodologies (statistical analysis, marketing research, or strategic planning) as a way of improving revenue and operational proficiencies…

So, in other words, companies with the strongest growth tend to encourage managed risk-taking and taking action when facing key problems, as opposed to static research and analytical activities…

Despite the preference for experimentation as described above, recent research by James Wilson and Kevin Desouza suggests that experimentation largely remains the focus of the R&D labs of the organization — instead of being an activity that is widespread in the organization.

Given that only a small percentage of the organization’s workforce is normally specifically assigned to R&D activities, Wilson and Desouza point-out that if experimentation activities are limited to the R&D area, a large percentage of the employee population will not be engaged in experimentation…

How can organizations encourage more widespread experimenation as a problem-solving paradigm?   Wilson and Desouza suggest the following steps:

  1. Increase Managerial Attention:  Managers should encourage — and even require — experimentation when new ideas are being developed and proposed
  2. Train Employees on the Experimentation Process:  Workers should have basic knowledge on how to collect data, rule out extraneous causes for findings, and analyze and communicate the outcome of their efforts
  3. Accept that Experimentation Can Get Messy:  Recognize that many experiments do not lead to fruitful results, and that the research process is an important activity in its own right
  4. Give Employees the Time, Resources, and Space to Experiment With Ideas:  Allow employees access to labs, data, research — and inside support — to help them experiment with their ideas
  5. Build a Process Where Experiments Can Be Done in a Systematic Matter:  The process should be tailored to the different areas of the organization, and the process should be refined and udated as new knowledge is gained from the experiments that are being conducted
  6. Create a Platform or Bulletin Board to Share Findings:  Organizations need an up-to-date and comprehensive strategy for sharing research findings, as many experiments may be done outside of formal corporate channels and outside of the normal work day)
  7. Allow intrinsically-motivated employees the opportunity to experiment, and give them access to the resources that more formal, officially-sanctioned experiments receive:  It is important to create a culture of experimentation within the organization
  8. Start a Working Papers and Presentations Series:  Include both researchers and practitioners, where individuals share results and get feedback from others

For more information, see “Intrapreneurship:  Managing Ideas Within Your Organization” by Kevin Desouza (University of Toronto Press, 2011).